23 Things they don't tell you about Capitalism

Free-market economists typically suggest that policies that help the rich benefit everyone, since rich people are most likely to invest and create jobs for others. Chang points out that despite the rise in favorable policies for the rich in recent decades, economic growth has slowed, and those in lower socioeconomic brackets rarely benefit from such policies.

Chang recounts a policy implemented by Josef Stalin in Soviet Russia. In 1928, the government forcefully collectivized farms, intending to use any surplus to invest in further growth. Fallout from the unpopular policy led to a famine responsible for millions of deaths while giving the Soviet government the resources to jumpstart key defense industries during World War II. Similarly, free-market economists of the 1800s viewed workers as pure consumers, incapable of investment, and held that only the rich capitalists would invest and create growth in the long run.

This view was tested in the 1950s and 1960s, when progressive taxation increased in many countries. Instead of slowing economic growth, this change increased growth. However, since the 1980s, when pro-rich policies gained momentum, investment and growth have declined. Chang suggests that instead of giving tax cuts to the rich, governments should redistribute funds to the poor through welfare programs. Since welfare recipients are likely to spend this money quickly, the economic boost would be tangible and immediate; doing so would also boost productivity as individuals gain access to healthcare and education.